Sophia’s Delivery Service charges a $55 service fee. The variable cost per service run is
$22. The company’s fixed expenses amount to $6,200. If the operating income equals
fixed expenses, what is the breakeven point in sales revenue for Sophia’s Delivery
Service?
A) $10,285
B) $4,140
C) $6,200
D) $10,340
The income statement and a partial balance sheet for Jetson Company is presented
below. Prepare the operating activities section of the statement of cash flows using the
direct method.
The Candy Factory manufactures healthy candy that it sells to consumers and groups in
the marketplace. The business produces chocolate-covered cherries in a three-step
process to develop the center of the cherries, coat the cherries in chocolate, and package
the final product. The total cost to produce a pound of chocolate covered cherries is the
sum of the cost per pound in each of the following processes:
The managerial accountant reported that there is no Work in Process Inventory.
Assuming that there is no work in process inventories, calculate the total cost per pound
for each of the three processes listed above and the total cost to produce a pound of
chocolate covered cherries. Explain why the cost in each process is important to the
managerial accountant. Discuss at least three reasons why the cost in the process is
important and how this cost is used at the company.
Use the following information to do a horizontal analysis of Marcus Corporation’s
income statement for the current year and prior year:
What is the dollar change in selling/general expenses?
A) $(4,840)
B) $81,000
C) $22,000
D) $102,000
To follow is selected information about The Boston Company for the current year and
prior year.
What is the current year’s net income percentage (as would be found on a vertical
analysis of the income statement for the current year)?
A) 8.60%
B) 9.80%
C) 9.00%
D) 108.60%
If a company uses the indirect method to prepare the statement of cash flows, which of
the following items would be subtracted from net income to determine the net cash flow
from operating activities?
A) A loss on the sale of equipment would be subtracted from net income to determine
the net cash flow from operating activities in the statement of cash flows.
B) An increase in dividends payable would be subtracted from net income to determine
the net cash flow from operating activities in the statement of cash flows.
C) Amortization of a premium on bonds payable would be subtracted from net income
to determine the net cash flow from operating activities in the statement of cash flows.
D) Depreciation expense would be subtracted from net income to determine the net
cash flow from operating activities in the statement of cash flows.
The manager at Rainbow International prepares a Cost of Quality report to report the
following expenses:
Which of the following total cost is the total cost of quality in the external failure cost
category?
A) $180,000
B) $7,500
C) $240,000
D) $680,000
E) $250,000
Under the direct method of cash flow, which of the following is not included in the
statement of cash flows?
A) Changes in accounts payable
B) Changes in accounts receivable
C) Changes in depreciation
D) Changes in inventory
Selected information about The Staccato Company for the current year and prior year is
given below.
The current year’s cost of goods sold percentage (as would be found on a vertical
analysis of the income statement for the current year) is
A) 94.53%.
B) 67.52%.
C) -5.47%.
D) 62.00%.
A ________ is used to accumulate all of the direct materials and direct labor used on
the job, as well as the manufacturing overhead allocated to the job.
A) bill of materials
B) job cost record
C) labor time record
D) production schedule
DJ’s T-Shirt Factory Contribution Margin
The managerial accountant at DJ’s T-Shirt Factory reported the price per shirt is $24.
The only variable cost is $15 per shirt. The managerial accountant also reported that the
sales goals were increased to 1,000 shirts during the next quarter. First, compute the
unit contribution margin per shirt. If fixed expenses are $8,000, what is the forecasted
operating income if 1,000 shirts are sold in the next quarter?
A) 6; $700
B) 7; $800
C) 8; $900
D) 9; $1,000
Catamount Studios has budgeted the following amounts for its next fiscal year:
If Catamount Studios can reduce fixed expenses by $46,500, by how much can variable
expenses per unit increase and still allow the company to maintain the original
breakeven sales in units?
A) $1.50
B) $20.00
C) $21.50
D) $18.50
Which of the following collects information from the world’s largest companies each
year and disseminates that information to institutional investors and other stakeholders?
A) The Carbon Disclosure Project (CDP)
B) The International Accounting Standards Board (IASB)
C) Global Reporting Initiative (GRI)
D) The International Organization for Standardization (ISO)
A company uses the direct method to prepare the statement of cash flows. It presents
the following data on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about salaries payable in the operating activities
category of the cash flow statement?
A) The increase of $4,000 will be subtracted from salary expense to determine
payments to employees.
B) The increase of $4,000 will be subtracted from net income.
C) The increase of $4,000 will be added to salary expense to determine payments to
employees.
D) The increase of $4,000 will be added to net income.
The McCumber Corporation data for the current year:
With respect to common stock, what would a horizontal analysis report?
A) Stockholder’s equity as 7.75% of total capital
B) Sales return of $11.17
C) 87.72% increase from prior to current year of cost of goods sold
D) Increase of $5,880 in common stock
The Frito-Lay, a stand-alone division of PepsiCo may be classified as a(n)
A) investment center.
B) cost center.
C) profit center.
D) revenue center.
Tasty Treats is a snow cone stand near the local park. To plan for the future, Tasty
Treats wants to determine its cost behavior patterns. It has the following information
available about its operating costs and the number of snow cones served.
Using the high-low method, the fixed costs for a month are
A) $980.
B) $12,660.
C) $1,500.
D) $5,320.
Johnson Trucking Company wants to determine a fuel surcharge to add to its customers’
bills based on the number of miles driven to each area. It wants to separate the fixed
and variable portion of the truck’s operating costs so it has a better idea of how distance
affects these costs. Johnson Trucking Company has the following data available.
The variable cost per mile using the high-low method is
A) $1.33.
B) $0.75.
C) $1.43.
D) $1.00.
Use the indirect method of preparing a statement of cash flows to answer the question.
Ending balances for Sunday Hut are listed below:
Net income for this year was $97,000.
What was the net cash inflow from financing activities?